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Question -

For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow, viz., operating, investing and financing.
(a) Acquired machinery for ₹ 2, 50,000 paying 20% by cheque and executing a bond for the balance payable.
(b) Paid ₹ 2, 50,000 to acquire shares in Informa Tech. and received a dividend of ₹ 50,000 after acquisition.
(c) Sold machinery of original cost ₹ 2, 00,000 with an accumulated depreciation of ₹ 1, 60,000 for ₹
60,000.



Answer -

(a)
 
Part payment ₹ 50,000 for acquiring machinery ₹ 2, 50,000 is related with Investing Activities
(b)

(b)

₹

Amount paid for acquiring shares

(2,50,000)

Dividend received

50,000

Net Cash used in Investing Activities

(2,00,000)
Amount paid to acquire assets and dividend received is a part of Investing Activities.
(c) Inflow of cash of ₹ 60,000 on sale of machinery is a part Investing Activities.

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